Merchandise transactions



Q36. Merchandise transactions
Entity A had the following transactions:
(1) May 1, 20×1: Purchased 260 units of merchandise at $10 per unit and paid $2,600 in cash.
(2) May 10, 20×1: Sold 50 units of merchandise at $14 per unit and received $700 in cash.
Prepare journal entries to record these transactions.

A36. Merchandise transactions

(1) May 1, 20×1: to record the purchase of merchandise

  Debit Credit
Merchandise 2,600  
     Cash   2,600

[Note]
260 units x $10 = $2,600

(2a) May 10, 20×1: to record the sale of merchandise

  Debit Credit
Cash 700  
     Sales revenue   700

[Note]
Sales revenue = 50 units x $14 = $700

(2b) May 10, 20×1: to record the cost of goods sold

  Debit Credit
Cost of goods sold 500  
     Merchandise   500

[Note]
Cost of goods sold = 50 units x $10 = $500

[Exercise]
Entity B had the following transactions:
(1) April 1, 20×1: Purchased 300 units of merchandise at $12 per unit and paid $3,600 in cash.
(2) April 6, 20×1: Sold 100 units of merchandise at $15 per unit and received $1,500 in cash.

(1) April 1, 20×1: to record the purchase of merchandise

  Debit Credit
Merchandise 3,600  
     Cash   3,600

[Note]
300 units x $12 = $3,600

(2a) April 6, 20×1: to record the sale of merchandise

  Debit Credit
Cash 1,500  
     Sales revenue   1,500

[Note]
Sales revenue = 100 units x $15 = $1,500

(2b) April 6, 20×1: to record the cost of goods sold

  Debit Credit
Cost of goods sold 1,200  
     Merchandise   1,200

[Note]
Cost of goods sold = 100 units x $12 = $1,200

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